A Republican member of the House Financial Services Committee is circulating a letter in Congress that calls for the appointment of an independent counsel to investigate the failure of MF Global.

Investigators and a bankruptcy trustee are trying to locate and recover a $1.6 billion shortfall in MF Global customer funds. The firm filed for bankruptcy last October after making risky bets on European debt.  

Rep. Michael Grimm (R-NY), a former FBI agent who investigated Wall Street for financial fraud, began circulating the letter today, according to sources familiar with the matter. Other House members, mainly Republicans, are expected to sign on, with formal release of the letter planned for next week when Congress returns from its current recess.

Among other things, sources said, the letter is designed to address allegations of conflict of interest in the ongoing investigations of MF Global, including one by the Commodities Futures Trading Commission.

CFTC chairman Gary Gensler is a former executive of Goldman Sachs (GS), where he worked with former MF Global CEO Jon Corzine. Gensler has recused himself from his agency’s probe into MF Global.

Also, President Obama’s re-election campaign disclosed last month that Corzine is a top fundraiser for the President, a so-called “bundler.”

Sources did not disclose further details of Grimm’s letter. But independent prosecutors or counsels can be appointed by the Justice Department or with Congressional authorization.

One of the most notable independent prosecutors was Kenneth Starr, a former judge whose final report on President’s Clinton’s affair with an intern and his real estate dealings led to his impeachment in 1998. Clinton was acquitted by the Senate early the next year.

A spokesperson for Grimm declined to comment.

Peter Barnes joined FOX Business Network (FBN) in September 2007. He serves as FBN's senior Washington correspondent.